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Monday, January 16, 2017

Why are cars so expensive in Ethiopia?

(Jan 16, 2016, (BBC))--Owning a car for many Ethiopians - even those with ready cash to spend in one of the world's fastest-growing economies - remains a pipe dream. "I have been saving for nearly four years now, and I still can't afford to buy even the cheapest vehicle here," a frustrated Girma Desalegn tells me.

He has been shopping around for a whole week in capital, Addis Ababa, and has still not found an affordable car. He is looking to buy a second-hand car imported from the Gulf states or Europe - but even they are prohibitively expensive because the government classifies cars as luxury goods.
This means even if a vehicle is second hand, it will be hit with import taxes of up to 200%.

"I have a budget of $15,000 (£12,300) and had expected that with that I could buy a decent family car. "I don't want to buy the Toyota Vitz," he says pointing to a row of small hatchbacks that have now become popular on Ethiopian roads.

These cost about $16,000 in Ethiopia; in neighbouring Kenya the same car costs not more than $8,000. It seems little wonder that Ethiopia has the world's lowest rate of car ownership, with only two cars per 1,000 inhabitants, according to a 2014 Deloitte report. Read more from BBC »